Washington Notebook: Obama, Romney spar over China trade sanctions

Tuesday, October 23, 2012

President Barack Obama and Republican challenger Mitt Romney took turns in Monday night's presidential debate flexing their muscles over trade relations with China, which they both said has used unfair tactics to gain a competitive advantage for its products in foreign markets.
In their third, and final, debate Romney repeated his campaign promise to slap across-the-board tariffs on China for artificially suppressing the value of its currency to make its products less expensive so they are picked by consumers over American-made products, ultimately costing American jobs.
He also accused China of "stealing our intellectual property, our patents, our designs, our technology, hacking into our computers, counterfeiting our goods. They have to understand we want to trade with them. We want a world that’s stable. We like free enterprise, but you got to play by the rules."
China's government has allowed its currency, the yuan, to appreciate about 10 percent in the past two years and many experts say labeling China a currency manipulator would spark a trade war.

Romney

Romney acknowledged China had made some progress, but that it needed to do more. And, he suggested, there is a "silent" trade war already underway that China is winning.
"We have enormous trade imbalance with China, and it’s worse this year than last year, and it’s worse last year than the year before. And so we have to understand that we can’t just surrender and lose jobs year in and year out. We have to say to our friend in China, look, you guys are playing aggressively. We understand it. But this can’t keep on going. You can’t keep on holding down the value of your currency, stealing our intellectual property, counterfeiting our products, selling them around the world, even to the United States," the former governor of Massachusetts said.
He pointed to a U.S. valve-maker he recently visited as an example of rampant Chinese cheating. The company discovered broken valves it was receiving for warranty repairs were actually counterfeit versions made in China with the same serial number.
"I want a great relationship with China. China can be our partner, but that doesn’t mean they can just roll all over us and steal our jobs on an unfair basis," Romney said.Obama took credit for bringing more trade disputes against China to the World Trade Organization than the previous administration of Republican George Bush, and creating a trade enforcement unit to coordinate the government's detection and response to potential trade violations.
The Obama administration has taken a targeted approach to challenging China on a product-specific basis when it bends international trade rules.
The president said 2009 antidumping duties imposed by his Commerce Department on under-priced Chinese tires have saved American jobs and that the United States recently won a dispute opening up China's market to U.S. steel.
The tire case was relatively minor in the context of the overall trade U.S.-China trade relationship. In last week's debate, Obama said his tariffs saved about 1,000 jobs.

Obama

Obama added that Romney criticized his action in the tire case as protectionist.
In his 2010 book, No Apology, Romney wrote, according to a CNN fact-check of debate claims: "President Obama's action to defend American tire companies from foreign competition may make good politics by repaying unions for their support of his campaign, but it is decidedly bad for the nation and our workers. Protectionism stifles productivity."
Obama said the best way to compete with China is to invest in education, research and technology so that businesses have the capability to produce the best products.
The president also boasted that U.S. exports to China have doubled since he took office.
Both candidates also spoke about China's growing military ambitions. Obama said he is using some of the military resources available from the draw down of forces in Iraq and Afghanistan to build up naval capacity in the Pacific, where the United States has major trading powers and long-standing relationships with countries such as Japan, Taiwan, Singapore and South Korea.
"And we believe China can be a partner, but we’re also sending a very clear signal that America is a Pacific power; that we are going to have a presence there. We are working with countries in the region to make sure, for example, that ships can pass through; that commerce continues. And we’re organizing trade relations with countries other than China so that China starts feeling more pressure about meeting basic international standards," Obama said.
"That's the kind of leadership we've shown in the region. That's the kind of leadership that we'll continue to show," he added.
“Both presidential candidates have said they will 'get tough' on China, but evidence has shown that the best way to make progress is through comprehensive engagement and legal actions—not political rhetoric,” John Frisbie, president of the U.S.-China Business Council, said in a statement.
“Whoever wins on November 6 will have to prioritize the real challenges the US-China commercial relationship faces: addressing market-access restrictions and unfair trade practices that affect American companies. These challenges require steady engagement, coordination with like-minded allies, and, when necessary, the use rules-based trade tools, such as World Trade Organization cases to level the playing field for American companies and workers.
“We should not lose perspective, our economic future depends more on actions we take here at home. Rather than argue over who is going to be tougher on China, dealing with our fiscal challenges and strengthening our competitive profile is a better approach. If we get our house in order, we will be well-equipped to compete with — and benefit from — a developing China,” he said.
- Eric Kulisch